A California federal judge has dismissed a class action lawsuit against Dfinity, the crypto firm behind Internet Computer (ICP), ruling that investors’ claims the firm sold unregistered securities are barred by time limitations, having been sent one year and six months late.
U.S. District Judge James Donato granted Dfinity’s motion to dismiss Tuesday, finding the case “time-barred” under the Securities Exchange Act’s three-year statute of repose.
The court sided with Dfinity’s argument that it first offered ICP tokens to the public in February 2017, placing the August 2021 investor lawsuit outside the required timeframe.
Law360 first reported the news.
The plaintiffs, represented at the time by Freedman Normand Friedland LLP (formerly Roche Freedman) when it first filed, offered no response to the defendants’ argument. As such, the dismissal of the claims as time-barred was “consequently warranted,” Judge Donato wrote.
Judge Donato also found investors failed to prove their fraud claims.
The court rejected their core argument that Dfinity founder Dominic Williams must have known and “necessarily had knowledge” about token distribution issues simply because of his role.
Tuesday’s ruling ends a contentious legal battle marked by controversy surrounding the plaintiffs’ previous counsel.
The case experienced months of delays after Kyle Roche, a former partner at defunct crypto law firm Roche Freedman, was allegedly recorded boasting about using litigation to gather confidential info on crypto companies.
Founders of the crypto law firm later went to court after fighting over $60 million worth of tokens issued by Ava Labs, according to a 2023 report from Reuters.
The plaintiffs, now represented by Selendy Gay PLLC after their previous counsel was replaced, had alleged Dfinity manipulated the digital asset market and artificially inflated ICP token prices following its May 2021 trading debut.
Despite the dismissal, Judge Donato still granted investors a final opportunity to amend their complaint by April 8, warning that failure to meet the deadline would result in dismissal under federal rules on civil procedure.
Representatives for Selendy Gay PLLC, Freedman Normand Friedland (formerly Roche Freedman), and Dfinity Foundation did not immediately respond to Decrypt’s requests for comment.
Edited by Sebastian Sinclair
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